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Strong demand meets big crop

Demand is up for much larger volumes of Peruvian avocados, importers say.

Peruvian shippers expect to send 130 million to 150 million pounds of Peruvian avocados to the U.S. this summer, a huge increase over last season, said Xavier Equihua, CEO of the Washington, D.C.-based Peruvian Avocado Commission.

But based on soaring demand, this year’s total should look small relatively soon from now, Equihua said.

“In three or four years, the supply will be 200 million to 250 million pounds, easily,” he said. “It took Mexico six or seven years to establish itself. It took Peru just a couple of years.”

Peru should continue to add significantly more volume every year regardless of how much California ships year-to-year, Equihua said.

With California product staying in the West, Peru can rely on ever-growing Eastern markets to keep its growth robust.

“There’s more summer demand, and the East and other parts of the U.S. are becoming larger markets,” Equihua said. “This market is going to grow and grow.”

Peru is the biggest avocado shipper to Europe, Equihua said, but the European markets are mature ones. The commission is betting big on the U.S. for future category growth.

“We can’t oversaturate Europe,” he said. “I wouldn’t be surprised if in 10 years, Europe is at the same level as it is now. The market that needs more is the U.S.”

The commission is doing a great job of beefing up its marketing this summer, said Bob Lucy, partner in Del Rey Avocado Co. Inc., Fallbrook, Calif., but when a crop triples in size in a single season, there’s a lot of work to do.

“It’s been much more challenging,” he said. “There’s been good acceptance, but you have to find new customers. Peruvian fruit has to earn its stripes every day.”

Fortunately, the quality of this year’s crop should help spur demand, Lucy said.

“The fruit doesn’t lie — it’s eating very well.”

One challenge for shippers is getting buyers to accept Peru’s larger size profile, which can often peak on 32s and 36s, Lucy said.

“There are more 32s and 36s than the U.S. market can absorb, and finding customers to take them is a challenge.”

Often, Del Rey and other shippers have to adjust the price of big Peruvian fruit in order to get retailers to take it.

Foodservice, fortunately for them, can be more open to larger avocados.

“In many cases, it doesn’t matter to foodservice if it’s a 32 or a 48,” Lucy said.

Peruvian fruit is typically associated with the East Coast, given that California avocados are shipping at the same time, but Index Fresh Inc., Bloomington, Calif., brings fruit in through Los Angeles as well as through Philadelphia and Houston, said president and CEO Dana Thomas.

“There’s room for Peru on the West Coast,” Thomas said. “In today’s market, demand is such that California can’t meet all of the West Coast demand. Peru complements well.”

Peru’s bigger size profile also helps it finds its niche, he said — even west of the Mississippi.

Thomas expected strong demand for Peruvian avocados this summer throughout the country.

“We have promotable volumes this year and at prices that make sense for retailers to get behind our programs,” he said.

Prices

Oxnard, Calif.-based Mission Produce reported strong demand for Peruvian avocados at the beginning of the 2014 season, said Ron Araiza, vice president of sales.

Mission’s growing partners in Peru began harvesting in early May and began shipping to the U.S. late in the month.

“The first few have been received well by the retail base and are moving through the system in an orderly fashion,” Araiza said.

At the beginning of the deal, Peruvian fruit was priced lower than California to Mexican avocados to help it gain acceptance at retail, Araiza said.

But as the season progresses and quality improves, he expected the price to get close to prices for California and Mexican fruit.

That process, Araiza said, was already underway by mid-June.

“The quality today is already much better than it was three weeks ago,” he said.

Despite the likelihood that Peruvian volumes to the U.S. will more than double this year, Araiza said shippers should have no trouble moving all that extra fruit.

“It’s a pretty orderly transition for back East,” he said. “It’s really complementing the lower volumes in California.”

And even in years when California has a big crop, Araiza said, he doesn’t anticipate a problem, since Peru can easily shift volumes to other markets.

“They also send to Europe, and even to Chile,” Araiza said. “I don’t think it will be much of an issue.”

Avocados have become so big, not only in the U.S. and in other countries, that finding the demand to meet the rising supplies shouldn’t be a huge concern for growers and shippers, Araiza said.

“We continue to surprise ourselves with the volumes shipping on a weekly basis around the world,” he said.

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About the Author:

Andy Nelson, markets editor

Andy Nelson joined The Packer as a staff writer in 2001. He became the paper's Handling & Distributing editor in 2005 and markets editor in 2006. Before joining Vance, Nelson was a staff writer for The Kansas City Star.